Take action - respond to UCL USS consultation today & lobby USS JNC, Fri 17 May
15 May 2019
Two ways to engage with what is happening to your pension (explained below): * Have your say in the UCL consultation on how UCL should respond to the USS offer (ideally by 5pm today, Wed 15 May); * Join the Lobby of USS on Friday 17 May.
Responding to the UCL consultation on USS
The USS Trustee is consulting about contribution structures and are determined to press on with their discredited valuation model which raises contributions for all. In an email to members yesterday the Provost asked members for their response to this latest consultation.
We encourage colleagues to respond that UCL's position should be:
- to defend the employer covenant and repeat UCL's own call for no de-risking,
- to call on the government to underwrite the pension scheme risk as part of the Augur review,
- to agree to pick up additional employee contributions in the interim.
You can add your comments to the consultation on the UCL online form and / or send them to your Head of Department who has been asked to pass them on to the Provost if they are received by 5pm today (Weds 15 May).
At the heart of this valuation model is ‘de-risking’. This means modelling the value of the assets held by the scheme by assuming that they are sold and placed long-term in low interest bearing government bonds and gilts. De-risking makes no sense if you accept that universities will continue to exist as a sector in the long term. The current optimum investment strategy beats CPI, and the assets grow faster than inflation.
Last year USS consulted members and many thousands responded, especially noting that the official justification for ‘de-risking’ (‘Test 1’) had been demolished by Dr Sam Marsh of the University of Sheffield as mathematically incoherent.
In 2018, UCL wrote to UUK and USS stating its clear opposition to ‘de-risking’:
“We are unconvinced that USS needs to shift its investment strategy toward a lower risk stance, either in practice or as an assumption that underpins the valuation. The strength of the sector covenant should underpin an ability to continue to take an appropriate degree of risk.” (‘additional comments’, UCL’s response to the UUK employer consultation, 2018)
But as noted above, USS is determined to continue with this 'de-risking' model. They have decided on a new justification — sector competition and the risk of fragmentation.
The USS Board say that they want to model for a new risk, namely that a number of well-funded universities leave the scheme, either because they break away or go bankrupt. Another term for this is the withdrawal of the employer covenant.
Pushing up costs creates a vicious cycle:
- Employer costs rise, so some decide to leave. They set up alternative pension schemes which are 100% DC (‘Defined Contribution’ is the 'industry standard'). The employees of those who leave get 100% DC.
- This would create a fractured USS, with costs on employers and employees rising further. Then the UUK will certainly demand 100% DC as the solution for the remainder to cut costs.
One of the key strengths of USS is its mutuality — that all the pre-92 university employers are in the same scheme. This is why UCU has called for the government to underwrite the scheme as they make changes to the sector.
We voted to support the lobby of USS on Friday called by London Region UCU.
This Friday the 17 May from 09:30
Lobby the USS Joint Negotiation Committee
Nearest tube: Bank. More information
We encourage all colleagues to attend.
In 2018, members took 14 days of strike action in overwhelming numbers to defend our USS pension. We demonstrated that there was no deficit in the pension scheme. And the Joint Expert Panel (JEP), set up in the wake of the dispute, agreed.
There is no need to make cuts in pensions or for employees to pay more into the scheme. The scheme is in surplus and is growing. The arguments that have been used to impose changes are specious. The JEP’s recommendations in their First Report are minor increases that the employers could afford to pick up in their entirety.
This is why UCU’s position is #NoDetriment.
However, the USS Board are refusing to implement the recommendations of the JEP. Consequently they are imposing large increases in contributions on both employees and employers. In March they pre-announced a 42.5% increase in contributions from employees — even though their own consultation of members last year overwhelmingly demanded no increase.
Those who run USS are undermining JEP by refusing to implement the first report. They intend to undermine the Second Report of JEP.
If they get away with this, we will pay more, and then, more likely than not, the employers will demand 100% Defined Contribution at the next valuation round.